Business Ethics in the News

AMAZON: Should Labor Practices of Multinationals be Judged by the Standards of their Home Country or the Country of its Operation?

Friday, Mar. 8, 2013

Last Thursday, a group of representatives from ver.di, one of Germany's largest labor unions, marched on one of Amazon's eight German distribution centers. Armed with 37,000 petition signatures, the group demanded a meeting with Amazon executives to negotiate a union wage contract for its German workforce. Amazon, which employs 8,000 people in Germany, has refused to communicate with union officials, emphasizing that it already pays above the union rate. The union has protested the "Big Brother" atmosphere where "everything is measured, everything is calculated, everything is geared toward efficiency." The union is also protesting the treatment of the 10,000 temporary workers that Amazon buses in from Spain and Romania to meet Christmas demand, citing German legislation, introduced in 2005 that lowered labor regulations, as a main contributor to the problem. Amazon is quickly becoming despised for personifying the qualities of American-style management that Germans despise: "People want to be treated with respect," argues the union leader. Should Amazon operate by more generous worker policies than it does in the US?

Kirk: Amazon and other multinationals must operate with sensitivity to local standards and expectations. They cannot just operate by their home country practices. In this case, however, the union seems unhappy with recent German legislation as with Amazon. Nonetheless, Amazon needs to resist the temptation to "race to the bottom," and should refrain from enacting more aggressive policies towards workers and the union. But in this case, refusing to negotiate with the union may be the only way to retain enough flexibility to operate profitably in Germany.

Patrick: While I agree that Amazon and other multinationals must operate under local standards, demanding that they adhere to local expectations has too many problems associated with it. The union is by no means an objective measure of cultural expectations as they have both political and economic interests; which leads to the question: Where can Amazon turn to decipher the expectations it should meet? The labor laws and regulations of the country. Legal code offers a clear set of rules for multinationals allowing them to know what they are getting into before they invest, as well as ensure that their current operations are compliant.